The Indian Rupee (INR) has weakened significantly against the US Dollar (USD) in the last decade, falling around 38% from 62.78 per dollar on March 6, 2015 to 87.12 per dollar on March 6, 2025.
While the falling rupee against the US dollar has triggered several actions from the Reserve Bank of India (RBI) recently, it is not something happening for the first time.
Historically, the Indian currency has weakened by around 3-5% per annum vs US dollar over the long term, according to a research by FundsIndia. It says that in the last 5, 10, 15 and 20 years, the Indian rupee has depreciated by 3.9%, 3.4%, 4.3% and 3.5% respectively annually against the US dollar.
| Time period | INR depreciation (%) against US dollar |
|---|---|
| 1 year | 4.1 |
| 3 years | 5.1 |
| 5 years | 3.9 |
| 10 years | 3.4 |
| 15 years | 4.3 |
| 20 years | 3.5 |
Source: Funds India Wealth Conversations (Feb 2025)
However, the falling rupee over the long-term has a significant impact on several aspects of personal financial planning.
The following is a quick look at how a weaker rupee against the US dollar affects three important aspects of financial planning – investments, travel and education.
1. Impact on investments
A weaker rupee raises import costs, contributing to higher domestic inflation. This may result in international investors departing from Indian markets, lowering stock prices and harming domestic investment portfolios.
However, investing in US stocks through global mutual funds (MFs) and exchange-traded funds (ETFs) may help protect you against rupee depreciation. The value of these international investments rises in rupee terms when the rupee declines against the dollar, possibly offsetting losses on domestic investments.
2. Impact on travel plans
As the rupee depreciates, international travel becomes more expensive with higher prices for lodging, meals and other expenses overseas.
“For instance, travel to countries where the local currency is closely tied to the US dollar such as the United Arab Emirates (UAE), can become more expensive when the rupee depreciates against the dollar,” said Pavan Kavad, managing director of Prithvi Exchange, a RBI licensed forex dealer.
Countries with weaker currencies than the rupee, on the other hand, may provide better exchange rates to Indian travelers in such a situation.
A weakening rupee also raises operational costs for airlines, particularly for expenses such as fuel, maintenance, and leasing, which are frequently denominated in US dollars. These additional operational costs are then passed on to customers as higher aircraft ticket prices, making air travel more expensive.
What to do: One can plan international trips to countries with lower currency rates. You may consider visiting countries where the rupee has strengthened or remains stable.
3. Impact on foreign education
As the rupee depreciates, students wishing to study overseas would face increased expenditures. Tuition fees, living expenditures and other foreign-currency-denominated costs rise, increasing the financial burden on students and families.
“Countries like the USA, where education costs are denominated in US dollars, are more affected by rupee depreciation. Students studying in these countries will be required to pay additional rupees to cover their expenditures,” said Kavad.
What to do: One can use currency converters to calculate tuition and other expenses. To cover the rising costs of currency depreciation, students may seek scholarships or financial aid from foreign universities.
